Bitcoin

Launched back in 2009, Bitcoin is a trailblazer and has become one of the world’s most famous cryptocurrencies.

Just like many other cryptocurrencies, Bitcoin relies on a peer-to-peer (P2P) solution where a database i distributed over network nodes.

Bitcoin went through a notable boom and bust in 2017-2018, partly fueled by intense media attention. In May 2017, the exchange rate for BTC/USD reached 1 BTC: 2,000 USD. On December 17 that same year, it peaked at 1 BTC: 19,783.21 USD. This was the beginning of the bust – by December 22 the exchange rate was down to under 14,000 USD per 1 BTC. Between January 6 and February 6, 2018, the Bitcoin price (in relation to the USD) fell by roughly 65%.

bitcoin money

The basics

Launched: 2009

Symbol: Ƀ

Abbreviation: BTC or XBT

Units and subunits

The basic unit for this cryptocurrency is 1 bitcoin. The subunits are millibitcoin, microbitcoin and satoshi.

  • 1 millibitcoin (1 mBTC) is 1/1,000 bitcoin.
  • 1 microbitcoin (1 μBTC) is 1/1,000,000 bitcoin.
  • 1 satoshi is 1/100 million bitcoin.

Bitcoin mining

New bitcoins are being created to reward those who donate computer power to run the bitcoin system. Thus, new bitcoins are being created everyday, but so far, it has not lead to inflation, since the market’s interest in buying bitcoins has increased so much over the years.

How are bitcoins transferred?

Bitcoins are transferred online without going through any bank or financial institution. If you want to transfer two bitcoins to your friend Adam, you ask for his bitcoin address. Adam uses his digital Bitcoin wallet to generate a single-use Bitcoin address and gives it to you. You order your own Bitcoin wallet to transfer 2 bitcoins to this address. You must use your private Bitcoin key to generate a digital signature to approve the transfer. The Bitcoin network will use the public key to confirm your digital signature, and transfer 2 bitcoins to the address you entered. Once the transfer has taken place, Adam’s single-use Bitcoin address is no longer valid for any other transaction.

Background

bitcoinIn late 2008, someone (or someones) using the alias Satoshi Nakamoto released the basic software for Bitcoin and also published a paper online containing all the information for how this cryptocurrency would work.

A small group of cryptocurrency enthusiasts took interest in the project and brought the cryptocurrency into existance. Bitcoin was launched in January 2009.

At first, the interest in Bitcoin was very small, but eventually a momentum was created. In 2011, the exchange rate for Bitcoin reached 1 BTC: 30 USD for the first time.

The Eurocrisis of 2013 made a lot of people worldwide question the reliability of the mainstream currencies and look for alternatives, especially as Cyprus’s financial system was shaken to the core and the government imposed limits on ATM and bank withdrawals. This helped fuel the interest in decentralized cryptocurrencies, and the Bitcoin was one of the most well-established of them all at this point, so it naturally attracted a lot of attention. In Cyprus, the Nicosa University annunced that they had begun accepting tuition payments in Bitcoin.

In October 2013, the world’s first ATM for Bitcoin was inaugurated in Vancouver, Canada.

On November 28, 2013, the exchange rate for BTC/USD reached 1 BTC:1,000 USD for the first time.